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Checking In: Indian Insurgence

by
April 25, 2012 12:46 am
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In the BRIC acronym, India is the third letter. When it comes to number of ETFs offering exposure to each BRIC nation, India also places third. With about 110 exchange-traded products offering exposure to India, the country has more ETFs and ETNs tracking it than Russia has, but India falls just short of Brazil when it comes to number of ETPs. The number of ETFs with China exposure is more than double that of the funds tracking India.

iShares, the world’s largest ETF issuer, has added to the India ETF fray multiple times this year and one of those new funds is the iShares MSCI India Index Fund (BATS: INDA).

Those familiar with the iShares lineup may wonder why INDA was even brought to market. After all, the firm also sponsors the iShares S&P India Nifty 50 Index Fund (Nasdaq: INDY). A valid question, but there are differences to be sure.

First off, INDA is far cheaper than its more seasoned cousin. The new fund has an expense ratio of 0.65% compared to 0.89% for INDY. At 0.65%, INDA also undercuts the 0.83% charged by the WisdomTree India Earnings ETF (NYSE: EPI), one of the largest India ETFs.

Despite sector and components differences that are slight to say the least, INDA has found some traction in just 10 weeks of trading. The key difference, expenses, might be the primary catalyst behind INDA raking in almost $18.8 million in assets under management since its early February. Average daily volume is around 12,600 shares per day.

Financials comprise 27.3% of INDA’s weight while technology names receive an allocation of 15%. Energy is the only other sector to garner a double-digit weight at 11.8%. While each fund does things a bit differently, most the large-cap India ETFs feature double-digit allocations to financials, tech and energy. That’s obviously the case with INDA and it’s the case with EPI and the PowerShares India Portfolio (NYSE: PIN) as well.

On a related note, INDA is home to 72 stocks, that’s about 40% more than EPI and PIN, though INDA’s lineup is less than half the size of EPI’s. Infosys (Nasdaq: INFY) is INDA’s largest holding at 8.35% and other top-10 holdings include Reliance Industries, HDFC Bank, Housing Development Finance, ITC Ltd., Tata Motors (NYSE: TTM) and ICICI Bank.

Again, every India ETF does things a little bit differently, but the aforementioned stocks are familiar findings in the India ETF universe. In different orders, all seven are found among INDY’s top-10 holdings, three are found among PIN’s top-10 fray and six dot EPI’s top-10 constituents.

As we said, the sector and individual stock allocations between INDA are noticeable, but not huge, at least not on paper. Still, the differences are enough to impact what should be investors’ primary concern: Performance. Since INDA debuted in early February, the fund has performed in line with the iPath MSCI India Index ETN (NYSE: INP) and outperformed PIN by nearly 70 basis points. However, the new fund also lags the returns offered by EPI and INDY, though it should be noted all five funds are in the red since INDA’s debut.

For more on India ETFs, please click HERE.


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